Energy Systems Integration: Implications for public policy

TLDR

Energy Systems Integration (ESI) is an emerging paradigm that holistically links electricity, gas, and heat sectors to enhance flexibility, renewable integration, and environmental performance, yet its economic, regulatory, and policy dimensions remain underexplored. The paper adopts a multi‑step approach to examine ESI. First, it analyzes the economics of ESI‑enabling technologies, then reviews how EU national regulators incentivise their adoption, and finally identifies major economic and policy barriers while proposing corresponding policy solutions. The authors conclude that current EU regulatory frameworks inadequately stimulate ESI investments and that only well‑designed incentives can enable widespread adoption.

Abstract

Energy Systems Integration (ESI) is an emerging paradigm and at the centre of the EU energy debate. ESI takes a holistic view of the electricity, gas, and heat sectors to deliver a clean, reliable, and affordable energy system. By using the synergies within and between sectors, ESI aims to increase flexibility in the energy system, maximise the integration of renewable energy and distributed generation, and reduce environmental impact. While ESI-enabling technologies have been studied from a technical perspective, the economic, regulatory, and policy dimensions of ESI are yet to be analysed in depth. This paper discusses ESI in a multi-step approach. We first focus on the economics of ESI-enabling technologies. Then we briefly discuss how the EU national regulators incentivise their adoption. Major economic and policy barriers to ESI are identified and policy solutions to overcome these barriers are proposed. We conclude that current regulatory frameworks in the EU do not sufficiently stimulate ESI investments and only through proper design of incentives ESI can be adopted.